Private Equity Health Care Acquisitions – May 2023

In light of the growing investor interest in healthcare and the risks associated with private equity ownership of healthcare companies, the Private Equity Stakeholder Project is tracking private equity-backed healthcare acquisitions. Below is a list of private equity healthcare buyouts, growth investments, and add-on acquisitions completed or announced during May 2023. We will continue to track acquisitions on a monthly basis.

See April 2023 acquisitions here.

See all our 2022 acquisitions updates here.

Cancer Treatment

Private equity’s push into oncology services continued in May with OneOncology’s acquisition of two new practices: Coastal Cancer Center in Myrtle Beach, SC and Pacific Cancer Care in Monterey, CA. The deals bring OneOncology’s reach to 18 practices across 14 states.[1]

OneOncology is currently owned by private equity firm General Atlantic, though it is slated to be sold to TPG Capital and AmerisourceBergen Corporation in a $2.1 billion deal expected to close September 2023.[2]

Private equity investment in oncology services has grown in recent years. A new study published in JAMA in May found that over 700 oncology clinics were acquired by or affiliated with a private equity firm between 2003 and 2022. Just 23 PE-owned platforms accounted for the deals. In seven states, private equity-backed providers accounted for over a quarter of all oncology clinics.[3]

The study’s authors conclude that “As increasing consolidation continues to affect the landscape of independent oncology practices, patients may face additional barriers to both accessibility and affordability of care.”[4]

In an editorial response to the study, Cary P. Gross, MD, of Yale School of Medicine and two other physicians commented that private equity firms may be attracted to oncology in part due to “profit potential directly related to the volume of chemotherapy administered and payment of oncologists as a percentage of the sales price of these increasingly high-priced drugs.”[5] Currently, oncologists are reimbursed at 106 percent of the average sales price for drugs.[6]

High potential to profit for cancer treatment may not be enough to buoy the high debt loads characteristic of many private equity-owned companies; international radiotherapy giant GenesisCare, owned by KKR, filed for Chapter 11 bankruptcy on June 1 after struggling under a debt load stemming in part from the private equity firm’s $1.5 billion takeover.[7]

Clinical Research

At least eight private equity deals in May involved companies in the clinical research and clinical trial space, consistent with the trend of increasing private equity investment in clinical trials and research.

The largest is a $7.1 billion buyout of biopharmaceutical contract research organization (CRO) Syneos Health. Syneos specializes in operating late-stage clinical trials.[8] Elliott Investment Management, Patient Square Capital and Veritas Capital have partnered to take the company private.[9]

In another big deal, Warburg Pincus and Advent International have agreed to buy Baxter International’s biopharma solutions unit for $4.25 billion. Although more broadly focused on contract manufacturing, the BioPharma Solutions business includes clinical research services.[10]

PE deals involving clinical research companies – May 2023

Reuters reported in January that investors are capitalizing on a quickly-growing gap between the supply of capital for clinical research and the number of drugs competing for it. Reuters cited Evaluate Pharma, a healthcare research firm, noting that “Annual spending on pharmaceutical research and development globally is projected to rise to $254 billion by 2026 from around $200 billion in 2020.”[11]

Investor appetite for clinical research also extends beyond pharmaceuticals. Last month’s acquisitions include MedTech company RQM+’s buyout of Libra Medical. RQM+ provides clinical and reimbursement services for medical devices throughout their lifecycle, including clinical trials.[12] It is owned by Linden Capital Partners,[13] which also owns Evolution Research Group, another CRO. [14]

Add-On Acquisitions

Buyouts

Growth Investments

[1] OneOncology, “OneOncology Inks Partnership with Two Independent Practices,” PR Newswire, May 3, 2023, https://www.prnewswire.com/news-releases/oneoncology-inks-partnership-with-two-independent-practices-301813945.html.

[2] “TPG And AmerisourceBergen to Acquire Leading Specialty Practice Network OneOncology from General Atlantic,” One Oncology, April 20, 2023, https://www.oneoncology.com/blog/tpg-and-amerisourcebergen-to-acquire-leading-specialty-practice-network-oneoncology-from-general-atlantic.

[3] Kevin Tyan, Miranda B. Lam, and Michael Milligan, “Private Equity Acquisition of Oncology Clinics in the US From 2003 to 2022,” JAMA Internal Medicine, May 1, 2023, https://doi.org/10.1001/jamainternmed.2023.0334.

[4] Kevin Tyan, Miranda B. Lam, and Michael Milligan, “Private Equity Acquisition of Oncology Clinics in the US From 2003 to 2022,” JAMA Internal Medicine, May 1, 2023, https://doi.org/10.1001/jamainternmed.2023.0334.

[5] Francis J. Crosson, Isabel R. Ostrer, and Cary P. Gross, “Private Equity in US Health Care—Now Cradle to Grave?,” JAMA Internal Medicine, May 1, 2023, https://doi.org/10.1001/jamainternmed.2023.0324.

[6] Victoria Bailey, “Private Equity Firms Acquired Over 700 Oncology Practices in 20 Years,” RevCycleIntelligence, May 3, 2023, https://revcycleintelligence.com/news/private-equity-firms-acquired-over-700-oncology-practices-in-20-years.

[7] Dave Sebastian, “KKR-Backed Radiotherapy Group GenesisCare Files for Bankruptcy,” Wall Street Journal, June 1, 2023, https://www.wsj.com/livecoverage/stock-market-today-dow-jones-06-01-2023/card/kkr-backed-radiotherapy-group-genesiscare-files-for-bankruptcy-LIVUzBoTLS8Z2Z8qPcP9.

[8] Gabrielle Masson, “All the rumors are true: Syneos Health inks $7.1B acquisition with investment firm trio,” FierceHealthcare, May 10, 2023. https://www.fiercebiotech.com/cro/all-rumors-are-true-syneos-health-inks-71b-acquisition-investment-firm-trio.

[9] Syneos Health Inc, “Syneos Health to Be Acquired by a Private Investment Consortium for Approximately $7.1 Billion,” GlobeNewswire News Room, May 10, 2023, https://www.globenewswire.com/news-release/2023/05/10/2665354/33420/en/Syneos-Health-to-be-Acquired-by-a-Private-Investment-Consortium-for-Approximately-7-1-Billion.html.

[10] Chris Newmarker, “Baxter to Divest Its BioPharma Solutions Business for $4.25B,” MassDevice, May 8, 2023, https://www.massdevice.com/baxter-to-divest-its-biopharma-solutions-business-for-4-25b/.

[11] David Carnevali, “Private Equity Acquires a Taste for Drug Development,” Reuters, January 9, 2023, sec. Healthcare & Pharmaceuticals, https://www.reuters.com/business/healthcare-pharmaceuticals/private-equity-acquires-taste-drug-development-2023-01-09/.

[12] “RQM+™ Acquires Libra Medical,” Business Wire, May 10, 2023, https://www.businesswire.com/news/home/20230510005813/en/RQM%E2%84%A2-Acquires-Libra-Medical.

[13] Linden Capital Partners, https://www.lindenllc.com/portfolio/investments/current/rqm/. Accessed June 1, 2023.

[14] Linden Capital Partners, https://www.lindenllc.com/portfolio/investments/current/erg/. Accessed June 1, 2023.